Arkansas lawmakers begin budget hearings

LITTLE ROCK, Ark. (AP) — Arkansas lawmakers began work Tuesday on crafting the state's budget for next year, nearing an election that could flip party control of the Legislature and amid unanswered questions about funding needs for schools and Medicaid.

The Joint Budget Committee gathered for the start of fall budget hearings, focusing primarily on organizational issues and seating charts before reviewing the funding needs for a handful of state boards. That's where most of the panel's work will focus until November, when they receive Gov. Mike Beebe's proposed balanced budget for the year that begins July 1, 2013.

Legislative leaders from both parties acknowledged they're beginning the budget work with uncertainty over an election where Republicans could win control of the House and Senate for the first time since Reconstruction.

"The biggest unknown is who's going to be here," said Sen. Michael Lamoureux, R-Russellville.

Republican control of the Legislature could alter budget discussions next year, with GOP lawmakers calling for an overhaul of the state's income taxes and limits on state spending. Republicans have also generally opposed or resisted an expansion of the state's Medicaid program under the federal health care law. Beebe, a Democrat, has said he supports the expansion and will ask lawmakers to approve it next year.

Democrats and Republicans are also expected to split on how to address a shortfall in the state's Medicaid budget, which Department of Human Services officials earlier this year estimated would be between $250 million and $400 million.

DHS spokeswoman Amy Webb said Tuesday that the agency currently expects to request $358 million in additional funding for the shortfall, but said that number would likely change the department presents its budget to the committee next month.

"We think it will fall somewhere within that range," Webb said.

Lawmakers have vented frustration with the range and say they want more specifics on the expected shortfall. Beebe has said he hopes to use some of the state's surplus, expected to reach $200 million by next year, to help pay for the shortfall.

"It's a two party state, and I think it would be helpful for both sides to have more information," said Rep. Terry Rice, R-Waldron, who Republicans hope to elect speaker if they win control of the House.

The agency's $1.1 billion budget request also doesn't include funding for the Medicaid expansion, because it's unclear if that will be approved by lawmakers.

Another major part of the state's budget that remains unknown is education. A legislative panel is expected to issue its recommendations on the per-student funding formula for the state's schools next week. That will drive much of the budget discussions because the state is required by law to fund education first.

Legislative leaders acknowledged they would begin the budget work in the middle of election politics, but said they hoped to keep it separate.

"I hope you will see serious discussions and debate and questions about the budgets. I hope they will be based on policy and not merely to score points on a campaign that's going on," said incoming House Speaker Darrin Williams, D-Little Rock.